System thinking: addressing the key financial issues
by Karl Simkins
02 July 2019
Finance professionals face some specific challenges in meeting system challenge
With a clear mandate that system working is integral to how the NHS needs to operate over the coming years, now is the time for systems to move from short-term operational planning to long-term planning and delivery. The NHS long-term implementation framework, published at the end of June and summarised by HFMA here, cements the important role of the system and sets the delivery challenge for the next five years.
A number of issues must be addressed to ensure systems and their constituent organisations meet the plan’s ambitions. Systems will also need to align strategies and plans where significant patient flows cross sustainability and transformation partnership (STP) boundaries.
Transitioning from an STP to integrated care system (ICS) is a major strategic issue for the two-thirds of systems yet to progress through the designation process. This will be a focus of system work programmes over the next few months as we develop the plans and future governance structures to deliver transformational change.
We’ve seen some tangible benefits in Cornwall* through working collaboratively as a system, particularly with financial arrangements over the last 18 months and through the operational planning process for 2019/20. Learning from those more developed ICS areas about their role, functionality and governance arrangements will help us to maximise the benefits from this wider collaboration between health, local authorities and other sectors partners.
Finance professionals face some specific challenges. What are the funding flows, tariff arrangements and contractual arrangements for systems? What are the governance arrangements for collaboration? How do we develop strategic commissioning with local authorities? How do we collaborate across ICS footprints, for example looking at specialised commissioning responsibilities in the future? And what will all this mean for individual staff and their work? The HFMA system governance series explores the key challenges relating to aligning resources, system decision-making and risk management.
Access to sufficient capital is a critical issue – both to maintain infrastructure and develop a transformed, digitally enabled estate and services. Demand for capital significantly outstrips resources available in the capital departmental expenditure limit in 2019/20 and the service has been asked to reduce commitments in 2019/20. STPs and ICSs need to be at the heart of this prioritisation process over the next few weeks.
But we must all think about the implications of this on longer term plans and the goal of achieving a sustainable financial position for organisations and systems. For example, key system digital initiatives such as the local health and care record exemplar will flounder without a strategic solution to capital funding.
Easily accessible data and information will also be important for planning and delivering our ambitions for the long-term plan. Systems must overcome challenges around information governance in sharing data, system interoperability and data quality before they can link data across organisations (including local authorities). That is the key to understanding better our population’s health and patient flows and targeting services to deliver the best outcome for our citizens.
Using data to inform strategic decisions will also be essential to improving value. In the South West system reports from NHS England are being used to identify potential areas for improvement. This challenge is explored in the recent HFMA briefing – What finance data is required to drive value at a population level?
The good news is that change is already visible across a number of systems. In many areas, clinical commissioning groups are working more closely together or merging to align with STP/ICS footprints. This on its own brings challenges, such as clarifying the functions delegated to joint committees and understanding what can be done at scale to make a difference.
These are positive steps to make system working more efficient. However, major transformational change programmes in integrated working will be required across systems to drive financial and operational improvements at scale. We need to share examples of what schemes can successfully support transformational change. What will help us address the major workforce gaps we have and deliver financial improvement? And what are the right payment and contractual mechanisms to support system efficiency.
The HFMA System Finance Special Interest Group will be exploring this over the coming year. Sharing of ideas is one of the benefits of being a member of HFMA, and I am sure this will be a key feature of this weeks’ HFMA summer conference.
*Karl Simkins is chief finance officer for the Cornwall and Isles of Scilly Sustainability and Transformation Partnership
If you are interested in joining the HFMA System Finance Special Interest Group, contact email@example.com.
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